Small business grants are financial awards that governments, big companies, and foundations offer to small businesses to facilitate their performance towards a bigger goal. A small business can receive a grant from private companies, as well as federal or state agencies. This is basically free money that is offered to improve a company’s performance or bring a company out of its hardships.
In this article, you will learn about small business grants in general and how they work for small businesses. Apart from that, we will also discuss the major features of small business grants. Finally, we will discuss the major types of grants for small businesses – grants from federal agencies, grants from state or regional agencies, and grants from corporate agencies. Hence, to learn more about small business grants, read on through to the end of the article.
What Are Small Business Grants?
According to Investopedia,
“A small-business grant is an award, usually financial, given by one entity (typically a company, foundation, or government) to a company to facilitate a goal or incentivize performance. Grants are essentially gifts that usually do not have to be paid back. Small-business grants are targeted to a variety of purposes, from starting a company or helping it run more efficiently to aiding its expansion.”
In most cases, these grants are free money. However, in other cases, these are not, as companies need to pay back these grants to the agency that offered support. Furthermore, businesses must use these grants based on the terms of the grant received. However, if the business did not use these grants on the basis of terms, the business will need to pay back the grants. In some cases, interests are applicable as well.
How Do Business Grants Work? – Major Features
According to American Express,
“The main advantage of using small business grants is that you do not need to repay them. This is welcome news for many small businesses that may have financing difficulties that make it challenging for them to repay a traditional business loan. Another pro is that information about the availability of small business grants is relatively easy to find online.”
In most cases, business grants are attached to a specific purpose. Hence, the process of application is mostly time-consuming and rigorous. The federal government of the United States decides how this grant shall work, and hence states the rules of the lifecycle of the grant. There are three phases of the grant lifecycle:
1. Pre-Award Phase
During this grant phase, the government agency, or the corporation that awards the grant, decides the purpose of the fund and the receiver of the grant. The agency also does the job related to the acceptance and receipt of grant applications.
2. Award Phase
The government agency that is providing the grant says to the applicants of the grant whether the grant is approved or not. In this case, the agency works with the receiver of the grant to finalize the legal framework related to the funding. The agency also decides on the disbursal of the fund.
3. Post-Award Phase
The government assigns a management officer for the grant. The job of this officer is to oversee the compliance of the grant during the grant’s lifecycle. The manager generates and provides regular reports that the receiver of the grant submits on the on-site audit of grants. Eventually, the agency closes the processing of the grant once they find out that the goals behind the disbursal of the grant are accomplished, and the receiver has spent the funds.
Major Types Of Small Business Grants
The following are the major types of small business grants offered by various agencies:
According to Nerdwallet,
“Government agencies are among the biggest distributors of business grants, supporting a range of enterprises from environmental conservation to child care services. Applying may seem intimidating, but federal grants are great opportunities for small-business owners looking to grow.”
The following are the major federal agencies that offer grants:
- Small Business Innovation Research and Small Business Technology Transfer programs (SBIR or STTR)
- USDA (US Department of Agriculture) Rural Business Development Grant
- Program for Investors in Microentrepreneurs
State Or Regional Grants
The following are the major state or regional agencies that offer grants:
- The U.S. Economic Development Administration
- The local Small Business Development Center (SBDC)
- Minority Business Development Agency centers
- State Trade Expansion Program (STEP)
The following are the major corporations and businesses that offer grants:
- National Association for the Self-Employed Growth Grant
- Verizon’s Digital Ready program for small businesses
- Small Business Growth Fund by Global Entrepreneur Fund and Hello Alice
- FedEx Small Business Grant Contest
- Venmo Small Business Grant Program
- Amazon Small Business Grant Program
- The U.S. Chamber of Commerce Top Small Business Awards
- Visa Everywhere Initiative
- Lenovo Evolve small-business grant
Grants For Startups
The following are the grants available for startups:
- Incfile Fresh Start Business Grant
- Hello Alice Grant platform
- Amber Grant for Women by WomensNet
- SubSummit Pitch Competition
Grants For Small Business Hardships
The following are the grants available for businesses going through hardships for various purposes:
- State and local small-business recovery grants
- Etsy Emergency Relief Fund by CERF+.
- DoorDash Restaurant Disaster Relief Fund
- Small Business Readiness for Resiliency (R4R) Program
Hope this article was helpful for you in getting a better idea of small business grants. A small business grant is a gift of money from a big agency (federal, state, or corporate) to a company or an individual. In most cases, the small business does not need to pay back, provided the business uses the money as per the terms of the grant. If they don’t, it must be paid back.
The most common types of grants are federal grants, state or regional grants, corporate grants, specialty grants, and grants for startups. Since grants are income, businesses need to pay taxes for them unless the law states otherwise. Do you have any more info to add regarding business grants? Share your ideas and opinions with us in the comments section below.